Behind the retail selloff

Wall Street has a habit of pounding companies in industries getting disrupted by new players and technological change.

If ever there were ever a segment in the middle of a changing landscape, it would be retail.

In case you haven’t been aware of the turmoil, there have been multiple retail bankruptcy filings.


Bankruptcy Wave

So much so that the number is predicted to exceed the shakeout during the 2008 and 2009 Great Recession.  

Macy’s (M) and JC Penney’s (JCP) reported gruesome quarterly results in mid-May, while Sears (SHLD) has acknowledged that it is a bankruptcy risk.

Brick-and-mortar retailers are struggling with the growing popularity of online shopping that makes physical storefronts less attractive.

Mighty Amazon

The emergence of Amazon (AMZN) as dominant in digital goods has shaken the industry. The company is now the second largest seller behind Wal-Mart (WMT).

Time will tell, but in my opinion, digital retailers like Amazon are looking to conquer new markets such as grocery goods and transportation as a way to help justify the massive valuations of tech stocks.

Meanwhile, back on the playing field, companies like Target (TGT)  and Macy’s are trying to use their assets more productively and hone their own digital strategies.


It is a tall order, as the use of digital tools only grows more pervasive by the day.  

Still, the contrarian in me thinks the sell-off of traditional retailer stocks is over done.

Photo Credit: Mike Mozart via Flickr Creative Commons